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Common knowledge of rationality and market clearing in economies with asymmetric information

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  • Ben-Porath, Elchanan
  • Heifetz, Aviad

Abstract

Consider an exchange economy with asymmetric information. What is the set of outcomes that are consistent with common knowledge of rationality and market clearing?

Suggested Citation

  • Ben-Porath, Elchanan & Heifetz, Aviad, 2011. "Common knowledge of rationality and market clearing in economies with asymmetric information," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2608-2626.
  • Handle: RePEc:eee:jetheo:v:146:y:2011:i:6:p:2608-2626
    DOI: 10.1016/j.jet.2011.10.015
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    References listed on IDEAS

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    1. Battigalli, Pierpaolo & Bonanno, Giacomo, 1999. "Recent results on belief, knowledge and the epistemic foundations of game theory," Research in Economics, Elsevier, vol. 53(2), pages 149-225, June.
    2. Roger Guesnerie, 2005. "Assessing Rational Expectations 2: "Eductive" Stability in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262072580, January.
    3. Pearce, David G, 1984. "Rationalizable Strategic Behavior and the Problem of Perfection," Econometrica, Econometric Society, vol. 52(4), pages 1029-1050, July.
    4. D. Pearce, 2010. "Rationalizable Strategic Behavior and the Problem of Perfection," Levine's Working Paper Archive 523, David K. Levine.
    5. Dutta, Jayasri & Morris, Stephen, 1997. "The Revelation of Information and Self-Fulfilling Beliefs," Journal of Economic Theory, Elsevier, vol. 73(1), pages 231-244, March.
    6. Bernheim, B Douglas, 1984. "Rationalizable Strategic Behavior," Econometrica, Econometric Society, vol. 52(4), pages 1007-1028, July.
    7. Tan, Tommy Chin-Chiu & da Costa Werlang, Sergio Ribeiro, 1988. "The Bayesian foundations of solution concepts of games," Journal of Economic Theory, Elsevier, vol. 45(2), pages 370-391, August.
    8. Radner, Roy, 1979. "Rational Expectations Equilibrium: Generic Existence and the Information Revealed by Prices," Econometrica, Econometric Society, vol. 47(3), pages 655-678, May.
    9. Kreps, David M., 1977. "A note on "fulfilled expectations" equilibria," Journal of Economic Theory, Elsevier, vol. 14(1), pages 32-43, February.
    10. R. Guesnerie, 2002. "Anchoring Economic Predictions in Common Knowledge," Econometrica, Econometric Society, vol. 70(2), pages 439-480, March.
    11. McAllister, Patrick H., 1990. "Rational behavior and rational expectations," Journal of Economic Theory, Elsevier, vol. 52(2), pages 332-363, December.
    12. Roy Radner, 1997. "Rational Expectations Equilibrium: Generic Existence and the Information Revealed by Prices," Levine's Working Paper Archive 1594, David K. Levine.
    13. John C Harsanyi, 1997. "Games with incomplete information played by "bayesian" players," Levine's Working Paper Archive 1175, David K. Levine.
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    More about this item

    Keywords

    Rational expectations; Rationalizability; Common knowledge; Asymmetric information; Exchange economy;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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